Millennium bcp said in July its Polish bank had gone through to the second phase of the sale process. Commerzbank’s mBank, however, left the race at the end of August, the sources have said.

“Offers were submitted by BZ WBK and Millennium. But Millennium’s offer is too low. In these circumstances only BZ WBK’s offer is taken into consideration,” a person familiar with the situation said. A second source confirmed the information.

The first source stressed, however, that no exclusivity in talks was being granted at this stage and, officially, both bidders were still in the game.

Deutsche Bank, Millennium bcp and Santander declined to comment.

There have been a number of Polish bank mergers and acquisitions, driven by tough competition, low interest rates and efforts by the country’s eurosceptic Law and Justice (PiS) party to curb what it sees as excessive foreign ownership.

A deal involving Deutsche Bank Polska, Poland’s 12th biggest lender by balance sheet size, could be valued at about $450 million, sources said earlier this year.

Other sources, however, said the transaction could end up being difficult to conclude. “We may end up in a situation where the deal will not be conducted in the end. If only BZ WBK is left at the table, why it should offer a high price?” one said.

“Millennium may have a problem with getting regulatory approval to do the deal, as Millennium finances its foreign currency credits portfolio with swaps, which is seen by the regulator as risky,” another banker said.

Deutsche is selling its private banking business, small and medium-enterprises business, and its local currency credit portfolio. The bank’s corporate business and foreign currency loan portfolio are not for sale, sources said.

“As far as BZ WBK is concerned, their owner is pressing for the deal while the local management is not enthusiastic, as it questions the quality of the assets put up for sale,” the banker said.

Additional reporting by Arno Schuetze and Anderas Framke in Frankfurt, Paul Day in Madrid, and Sergio Goncalves in Lisbon; editing by David Clarke